Top Ten Ethics and Compliance Predictions and Recommendations for 2016

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Top Ten Ethics & Compliance Predictions and Recommendations for 2016

January 12, 2015


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P R E S E N T E D B Y

Vice President, Advisory Services NAVEX Global

Ed Petry, Ph.D.Vice President, Advisory Services NAVEX Global

Andrew Foose, J.D.


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Agenda

• Introductions & Overview• Predictions & Recommendations

1. Addressing The Millennial Mindset

2. E&C Goes Global

3. Maturing Board Oversight Expectations

4. Politics Invades the Workplace

5. Increasing Prominence of Sports Scandals

6. Forging New Alliances With HR

7. New Whistleblower Initiatives

8. Anti-Bribery, Corruption and Third-Party Risk Management

9. Addressing Cynicism Head On

10. Expanding the Scope of E&C

•Q&A


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T R E N D # 1

The Rise of the Millennial Mindset


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• Millennials—born between 1975 and 1995—will comprise 75% of workforce by 2025

• Highly influential—others are adopting a “millennial state of mind”• Some of the changes that can be traced to the millennial

mindset include:• Increasing skepticism that business will do the right thing when faced with a

tough decision• Far more emphasis on the importance of an organization’s social

responsibility and environmental impact• Changed expectations about how we learn and acquire information

Visit the Pew Research Center online and take their “How Millennial Are You?” quiz

Keeping Pace With a Changing Workforce

http://www.pewresearch.org/quiz/how-millennial-are-you/


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1. Plan for change. Start innovating now

2. Assess learning styles for your organization. Adapt to employee’s preferred learning methods—including interactive online codes, training and policies

3. Don’t jump to conclusions. Studies with findings that suggest millennials are more likely to cross ethical lines can be misleading.

4. Expect to be surprised. Millennials often have a preference for face-to-face communications.

Key Steps For Organizations To Take


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T R E N D # 2

Transitioning to a More Global Center of Gravity for Ethics and Compliance


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U.S. No Longer Center of E&C Momentum

• Until E&C scandals began to implicate non-U.S. headquartered companies, E&C momentum was largely based in the U.S.

• Regulatory initiatives and best practices are now less likely to come from the U.S.• U.K. Modern Slavery Act 2015• ISO 19600• European Court of Justice’s Safe Harbor judgment• U.K. Anti-Corruption Plan• Russian Federal Act on Data Protection

• These developments have broad application and often are replicated in other jurisdictions


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1. Get help to stay informed. Enlist the help of local legal liaisons to keep you up-to-date

2. Identify your organization’s obligations. Understand which provisions apply to you.

3. Keep key decision makers up-to-date. Prioritize developments that impact your organization

4. Keep an open mind. Work to overcome any “not created here” biases that may exist in your organization.

5. Develop targeted communications and training. Help those directly impacted by new regulations understand the implications.



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T R E N D # 3

Board Expectations for Ethics & Compliance Oversight Get More Specific, Uniform and Comprehensive


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April, 2015—U.S. Department of Health & Human Services, Office of Inspector General (OIG) released comprehensive set of guidelines: Practical Guidance for Health Care Governing Boards on Compliance Oversight

Guidance part of a broader trend to hold E&C programs—and boards—to more uniform standards

New Frameworks for Board Oversight


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Boards Will Be Expected to Know More & Do More

• April, 2015—U.S. Department of Health & Human Services, Office of Inspector General (OIG) released comprehensive set of guidelines: Practical Guidance for Health Care Governing Boards on Compliance Oversight

• Guidance part of a broader trend to hold E&C programs—and boards—to more uniform standards

• Boards need to take very specific and proactive roles relative to their compliance oversight duties

• Boards need to gain a better understanding of the adequacy and effectiveness of their organization’s E&C programs, set the right expectations and ask the right questions


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1. Jump-start your board’s engagement. To meet their obligations, boards need to gain a better understanding of

the adequacy and effectiveness of their organization’s E&C programs, set the right expectations and ask the right questions

Provide questions to your board and/or senior leadership to help them think through their roles and responsibilities related to the E&C program

• For a list of questions you can use, see our blog article “Real Guidance (Finally) On the Compliance Oversight Role of Boards”

Help your board take very specific and proactive roles relative to their compliance oversight duties


http://blog.navexglobal.com/2015/06/23/real-guidance-finally-compliance-oversight-role-boards





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2. Reassess your current board training Find an approach that addresses unique board-related risk areas Add a discussion of E&C risk areas that pertain specifically to

board members Help board members understand how to interpret E&C data Develop a plan for how to “credit” board members for training

they receive and encourage them to share best practices from other organizations

Utilize specific expertise of board members and involve them in creating or facilitating board training



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3. Make the most of the space allotted in the report to the board Don’t assume too much Provide information on aspects of your E&C

program beyond the helpline “Don’t” data dump “Do” use data to support the “why” and

“how” of your overall effectiveness



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T R E N D # 4

Politics Invades the Workplace


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US’s 2016 election dominating news, social media and many employee conversations

Creates a unique set of compliance problems:

Campaign financing Quid pro quo deals Misuse of company resources Inevitable clash of political views can

lead to policy violations and discriminatory behavior

2016 Election Will Dominate Many Employee Conversations


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1. Review your code of conduct and policies. Make sure they’re clear and up-to-date about political contributions, political activity, and campaign financing.

2. Keep an eye on transparency initiatives. Look out for shareholder resolutions expanding political spending disclosures.

3. Over-communicate. Be clear about limits on using company resources for political activities.

4. Reinforce role-specific policies. This is particularly important with senior executives.

5. Be prepared to make hard decisions. Political issues and decisions are charged issues that can be very difficult to handle. Be ready.

6. Know when to say when. Guard against political discussions in the workplace that become derogatory and offensive.



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T R E N D # 5

The Wide World of Sports Scandals and How They Impact Our E&C Discussions


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Cause for public discussions of ethics

More attention has been given to behavior off the field

Bribery and corruption Performance enhancing drugs Personal transgressions and

accountability Violence, racism and drug use Athlete safety and exploitation

Sports Scandals Provide Opportunity for More E&C Conversations


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1. In your E&C training and case studies, consider replacing Ken Lay (Enron) with Sepp Blatter (FIFA) Employees more likely to connect and engage Sports-related case studies bring home importance of culture–and highlight

areas of dysfunction

2. Don’t plan any major U.S. initiatives for the second half of March or any meetings June 14-July 15, 2018 Americans spend nearly 700 million hours watching the college basketball

championship games Resulting in annual losses of $1.9 billion due to distracted and

unproductive workers



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T R E N D # 6

Working With HR—Time to Try Again


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Better Alignment With E&C and HR Has Positive Ripple Effect

• No corporate function has more opportunity to contact employees as often as HR Recruiting, hiring, on-boarding, performance reviews, promotions,

investigations, discipline, reorganizations, terminations and exit interviews HR is often the primary channel for reporting E&C concerns

• 24 years ago, U.S. Sentencing Guidelines for Organizations emphasized importance of the HR function in creating and maintaining an effective compliance program


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Coordination between HR and E&C is often strained by

Duplication of efforts Inefficiencies Fear that confidential employee

information will not remain confidential

Turf battles

Everyone Wins When HR & Compliance Work Well Together


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1. First things first: bury the hatchet

2. Build (or re-build) trust

3. Recruiting and onboarding

4. Get on the same page with communications and training

5. Track all the channels used by your employees for reporting

6. Work with HR to incorporate E&C standards into performance management processes

7. Ensure consistent discipline

8. Get over it; no more turf battles



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T R E N D # 7

Renewed Focus On Boosting Whistleblower Rights and Squashing Retaliation


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Two legal developments that bear watching

U.S. Occupational Safety and Health Administration (OSHA) drafted guidelines to help organizations design programs to protect whistleblower rights• Implement a retaliation

response system

• Conduct anti-retaliation compliance training

• Monitor and audit

Berman v. Neo@Ogilvy LLC: Interpretation of “whistleblower”

Legal Developments Shine Spotlight on Whistleblowing & Retaliation


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1. Review and comment on the new OSHA guidelines

2. Implement a publicized retaliation response system, including a helpline/hotline and independent assessment of claims of retaliation

3. Develop anti-retaliation training



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T R E N D # 8

Getting Serious About Anti-Bribery and Corruption Efforts and Third-Party Risk Management


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Increase in respondents highly challenged by the issue of ABC

Management of third parties poses the greatest challenge

More than one-third of respondents do not formally identify high-risk third parties

ABC considerations too low a priority by companies preparing to acquire, or merge with, other corporations across borders

Lack of resources to manage ABC risk

ABC risk assessment is one of their companies’ top challenges

Third Party Risk Still a Blind Spot

Source: KPMG Anti-Bribery and Corruption Survey 2015

http://www.kpmg.com/cee/en/issuesandinsights/articlespublications/pages/anti-bribery-corruption-survey-2015.aspx




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1. Conduct a robust corporate risk assessment

2. Identify and address your company’s third-party risks Scrutiny should increase as “red flags” surface Understand business rationale for engaging with a third party Ongoing monitoring of third party relationships

3. Review your ABC mitigation plan for completeness

4. Create or update written policies and procedures to address these risks—particularly the highest risks

5. Train third parties on your organization’s policies

6. Devise a plan to implement changes in demonstrable, documented stages



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T R E N D # 9

Cynicism, Fatigue and Compliance Pushback—A Problem We Can No Longer Ignore


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Employee Disengagement Creates Major Risk

• 37% of respondents thought employee cynicism was the top threat to the effectiveness of their E&C training programs

• Look for the signs (if you haven’t seen them already): The silent elevator, eye-roll, snicker or harrumph

• Just as likely for leaders to lack engagement and just be going through the motions

• Compliance pushback most often seen with training and communications

• Lack of engagement/alignment can impact helpline usage• Left unchecked, this can erode even your best efforts


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1. Don’t assume “it can’t happen here”

2. Focus on leadership at all levels

3. Start with the most egregious sources that fuel cynicism and compliance pushback: Insincerity, wasting employees’ time, inconsistency, lack of transparency

4. Re-position E&C office as a strategic ally, not just the people who say no

5. Pay attention to public sentiment and how it impacts your employees



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T R E N D # 1 0

Expanding the Scope of E&C: Is This the Year for Pushing Boundaries and Increasing Authority?


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Is the scope of our E&C programs too narrowly focused?

High-profile areas with clear E&C components are often over-looked as not “part of the job”

Cyber security, sustainability, marketing, advertising, philanthropy, human rights, community engagement

Long term goal, but look for short term opportunities

Thinking Outside the E&C Box


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1. Ask questions about who owns key risk areas. Confirm that E&C issues related to each risk area are being addressed

2. Find common ground. Corporate social responsibility, human rights, sustainability: it’s in everyone’s interest to make sure E&C issues related to these areas are identified and addressed

3. Pay attention to advertising, marketing and your values. Watch for disconnects between your core values and your marketing campaigns



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Conclusion


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• The opportunity for E&C to influence the decisions of the organization are greater than ever before. As ethics and compliance professionals, we need to be ready to take on that responsibility.

• Position the E&C office strategically. Look for opportunities to broaden your influence. Find more, different and better ways to work with HR.

• Change your approach from addressing the needs of “millennials” to managing the “millennial mindset.”

• Don’t ignore the all-pervasive influence of sports, politics and other priorities of the public that influence perceptions about ethics.

• Cast a broad net for best practices and regulatory trends. We can’t afford to be parochial.

• Make third-parties and due diligence a priority.• Identify and address the root causes of cynicism and compliance fatigue.

Key Takeaways & Ideas to Consider Implementing in 2016


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I’d Like to Talk with a NAVEX Global Solutions Expert About… [check all that apply]

Reviewing whether or not my program measures up to regulatory requirements

Creating a training plan that covers all my risks and audiences Making sure my investigations are legal and effective Automating manual processes in my program (policies, incident

management, third party due diligence, etc.) Getting deeper analytics on my organization’s hotline data I have a different challenge I’d like to discuss with an expert


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Have a Great 2016!

Ed Petry, Ph.D.Vice President, Advisory Services [email protected]

Andrew Foose, J.D.Vice President, Advisory [email protected]

mailto:[email protected]


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Top Ten Ethics and Compliance Predictions and Recommendations for 2016